What happened
Rivian Automotive (RIVN -2.77%) shares have dropped this week along with many technology and growth stocks. But while the tech-heavy Nasdaq Composite index was off by nearly 2% for the week as of early Friday morning, Rivian was down by more than 13%, according to data provided by S&P Global Market Intelligence.
That decline brought the electric vehicle (EV) stock to its lowest level in more than six months. But a short-term upside catalyst for the stock may appear next week, too.
So what
Rivian's shares slumped after investors learned that it's pulling back from some previously announced growth plans. In September, Rivian announced plans for a joint venture electric van business in Europe with Mercedes-Benz Group. That project seemed like a natural extension of the company's U.S.-based electric delivery van production for Amazon. But this week, Rivian said that it's putting that partnership with Mercedes-Benz on pause to conserve capital for use in other areas of its business. Investors took that as a bad sign.
Image source: Rivian Automotive.
Now what
"At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian," CEO R.J. Scaringe said in a statement.
The decision shouldn't come as too much of a surprise, however. The EV maker said in the third-quarter report it delivered last month that it was planning to cut back capital expenditures as it streamlined its production plans due to supply chain conditions.
While investors took this reversal as bad news, it really doesn't change any of Rivian's other growth plans, and investors should continue to focus on its rate of production growth. And while it's not something to trade around, there is one other item of note that could provide a bounce for the shares early next week: the introduction of the company into the Nasdaq 100 index, which will occur as of the close of trading Friday.
